This heightened sense of India’s stature could well be for two reasons. First, the UK’s desire to “look beyond” Europe after it exits the European Union, post the historic referendum earlier this year, and strengthen trade links with key partners such as India. We find this sentiment echoing in Prime Minister May’s recent words, “As we leave the European Union, we have the chance to forge a new global role for the UK—to look beyond our continent and towards the economic and diplomatic opportunities in the wider world. As we embark on the trade mission to India we will send the message that the UK will be the most passionate, most consistent, and most convincing advocate for free trade.”
There is no doubt that an economically resurgent India with assured growth of 7.5% plus on the back of big tax reforms, opening up of vital sectors of the economy like defence and insurance to 100% FDI as well as easier terms for doing business, has lots to offer to the UK. Prime Minister May’s promise that she is “determined to capitalise on those opportunities”, comes as a big reassurance to Indian industry looking to the new decisive leadership in the UK for a fresh start of stability and renewed commitment to foreign enterprise to view UK as an ideal investment and business hub.
Second, India and the UK are very well poised for a calibration in the multi-faceted economic and cultural ties which have entered an era of “strategic partnership” encompassing civil nuclear energy, space, defence, science and technology, and education, among others. Commercial deals worth over £9.3 billion between Indian and British companies have been announced and the UK is positioned as the third largest inward investor in India, with a cumulative equity investment of US $23.10 billion (April 2000-March 2016). Reciprocally, India is the UK’s third largest source of FDI, with 122 FDI projects in 2014-15. Bilateral trade, though showing a few blips, ranks Britain as the 12th largest partner and among the seven countries with which India has a trade surplus.
In a nutshell, there are all the ingredients for igniting the India-UK economic engagement, and expectations of New Delhi and London lighting up the scene with some fireworks are not misplaced.
One big takeaway would be post-Brexit assurance. While the full impact of the UK move to “Leave” from the European Union will take some time to unfold, there are, according to an extensive and in-depth FICCI survey, concerns in Indian industry over the possibilities of a decline in businesses as overall growth in the country slows in the immediate short run. The mood in the survey hints at optimism that India is likely to get continued attention from investors in the UK, but a reassuring signal to Indian industry that there are certain things that are not going to change as a result of Brexit, would create the perfect pitch for India and UK to strengthen ties.
The other expectations are in line with some deliverables in some key sectors that hold tremendous prospects for deeper business connect. There are some potential areas which need to be actively explored for scaling up bilateral trade and investment and some brisk footwork on these will help set the stage for stronger business linkages as Brexit gets underway.
Take infrastructure. There is scope for British companies to invest in industrial corridors, urban development, mass transit system, building and developing new ports, coastal economic zones, development of inland waterways and modernisation of railway stations. There is also substantial scope for UK-India cooperation in innovative technologies for improving highway development, road engineering and development of green fuels in the automobile sector and electric vehicles.
Smart cities, as an extension of infrastructure, have already become a talking point for India, and the UK can look at opportunities in finding smarter ways to design and manage urbanisation, in infrastructure finance to explore a finance model that empowers a local authority, in exploration of an optimum framework for governance and best practices as applied to smart city development frameworks.
Closely related to these avenues is India’s flagship programme Make in India, which aims to transform Indian manufacturing through initiatives designed to facilitate investment, foster innovation, protect intellectual property and build world class manufacturing infrastructure. The UK can add tremendous value to Indian efforts and initiatives through collaboration, especially in defence, aerospace, electronics and electrical, chemicals, pharmaceuticals, bio-technology and food processing.
Industry has always believed that a real change in manufacturing can come about only if we empower our small and medium enterprises. Here we are in line with the British thinking which reflects in the presence of representatives from UK’s small and medium-sized businesses in Prime Minister Theresa May’s delegation. Besides, a strong focus on these small businesses, India and the UK need to build on the momentum in our partnership on education and skills. What we have to do now is focus our collaborative efforts on greater industry interfacing, integration of vocational skills in education, capacity building, mutual recognition of qualifications and creation of structured pathways between institutions and levels.
There is a lot to do in the financial services space as India and the UK have vibrant financial markets, and financial technology (Fintech) in UK has really evolved. We need to collaborate with the UK market for key learnings and further development and in this context, a FinTech conference being organised by FICCI could be an ideal platform for convergence of investors and other stakeholders and for developing opportunities for collaboration.
There is of course innovation, a strong pillar of India-UK cooperation. The DFID (UKAID) has been a main partner in the Millennium Alliance programme being implemented by FICCI, but going ahead, India and the UK need higher engagement to foster innovation led entrepreneurship, provide opportunities and incentives to Indian start-ups to incubate in incubation centres harboured in UK universities, design targeted programmes to support Indian start-ups in UK markets and vice versa.
The visit of the British Prime Minister is a mutual response to the need of reaching out to allies in a rapidly changing global economic landscape, it is a reaffirmation of the continuity of a relationship tinged with sepia tints of enterprise, music, books and cinema and mostly it is an endorsement of a tried, tested and proven relationship. May this friendship touch new highs.
Harshavardhan Neotia is President, FICCI